Four out of five dentists in a recent Wealthy Dentist survey report paying their dental hygienists a salary or base hourly wage rather than on commission. It’s an important economic consideration for any dentist.

When setting compensation structures or assigning available operatory space, it is useful to analyze the relative profitability of the individual producers in the practice. The chart below begins by analyzing one dentist’s profit on his two hygienists, Mary and Tim, after direct costs (labor and treatment supplies) but before general overhead costs such as rent and office administration.

Comparative Value of One Day’s Production

Hygienists

Mary

Tim

(Commission)

(Salary)

Production

$700

$700

Collections (96%)

672

672

..Less: variable costs (9%)

– 63

– 63

..Less: labor

…..commission (45%)

– 288

n/a

…..salary

n/a

– 288

…..employer taxes (10%)

– 29

– 29

Profit

$292

$292

In the example, Mary is paid on commission (45% of production), whereas Tim is paid a flat daily salary of $288. At current production levels, the dentist realizes about the same amount of profit on each, $292 per day.

As production increases, Tim will become increasingly more profitable than Mary. The dentist’s profit on Mary will always be 36% of whatever amount she produces, as a result of the commission structure.

Measuring Profits

Profit margin on:

Mary

Tim

Collections

96%

96%

Less: variable costs

– 9%

– 9%

Less: commission

– 41%

n/a

Less: employer taxes

– 10%

n/a

Profit

36%

87%

However, for each additional dollar that Tim produces, the dentist’s profit will be 87% – over twice as much! This is because once Tim’s salary is paid, there is no further labor cost for that day.

Suppose the dentist has a goal to increase profit in the practice by $1,000 per month, or $58 per day. Mary would have to produce an extra $161 ($58 divided by 36%) to generate the $58 profit; Tim would only have to produce an extra $67.

The majority of the practices that we see have a goal of increasing profit. For the most part, this means that production must increase. Clearly, the dentist in this situation wants to convert his hygiene department to a salaried basis. That way, the doctor will net more profit on each additional dollar produced.

The conversion from commission basis to salary basis, together with the setting of the higher goals, can be structured as a “Win-Win” situation that benefits both the hygienists and the dentist.

Let’s assume that the dentist has already determined that in order to meet the practice’s goals, hygiene production has to equal $962 per day. (We have repeatedly seen practices increase hygiene production from levels of $700 per day to $1,000 or more per day.)

An equitable, Win-Win compensation alternative that meets the dentist’s goal and motivates the hygienists could look like the following:

Step 1: Effective immediately, both hygienists are placed on salary at $288 per day.

Step 2: The new production goal is $962 per hygienist per day, with advanced training to be provided.

Step 3: When each hygienist achieves an average production level equal to the new goal for one month, then he or she will earn a one-time increase in base salary of $25 per day, for a total of $313.

Increasing Daily Hygiene Production to $962… plus:

Tim (Salary)

Goal

Increase

Production

700

962

262

Collections (96%)

672

924

252

Less:

…variable costs (9%)

– 63

– 87

24

…commission (41%)

n/a

n/a

…salary

– 288

– 313

25

…employer taxes (10%)

– 29

– 31

3

Profit per Day

292

493

200

Under this proposal, neither hygienist experiences a reduction in current income due to the conversion from commission to salary. However, they do obtain the potential for realizing significantly higher levels of income, and the doctor increases his or her profit by $200 per hygienist a day. This is achieved through a combination of advanced clinical training and a bonus system that motivates the entire office staff to achieve ever-higher levels of production.

Next week I’ll discuss the economic differences between hygienists and dental associates.

Considering the current economic environment The Wealthy Dentist decided to conduct a survey asking dentists if they pay their hygienists an hourly wage or if compensation is based on commission.

It seems most dentists still pay their dental hygienists an hourly wage, but some feel paying on commission is more fair. Said one dentist, “Hygienists are worth their weight in gold!” Another dentist disagreed saying, “Practices couldn’t run without them, but the current economics barely breaks even at best … hygienists seem to think they are cash cows for the office and fail to recognize the support and facilities the utilize.”

It’s an interesting economic issue. Click on Play to hear more of what dentists say about paying hygienists —

Alternative providers are playing an increasing role in dentistry, with more and more states expanding the roles of alternative or mid-level dental providers.

In our survey, half of dentist respondents said they are concerned about the level of care alternative dental providers can provide. In addition, over half believe that there should be fewer alternative providers than there already are.

On the other hand, 22% of dentists in this survey feel good about mid-level oral health providers and believe that alternative providers increase access to dental care.

“There’s no real need for more of these non-dentist providers,” said a Nevada dentist. “If patients and dental insurance valued dental care with proper payment for services, they could use the existing infrastructure of dental availability.”

“We need MORE alternative dental providers to meet the needs of our population. This is the only way we will be able to meet present and future underserved,” said a Connecticut endodontist.

“We’ll need them when there is a public health system to employ them,” said an Illinois Dentist. “Otherwise, dental insurance companies and entrepreneurial dentists will employ them and use them to crush our ability to make a living in private practices.”

Do you have any further thoughts on alternative providers of dentistry and dental care?

A recent The Wealthy Dentist survey of dentists showed 53% believe that alternative dental providers are a bad idea.

Dental Health Aide Therapists already provide care in Alaska Native territories and in Minnesota, while Kansas, Connecticut, Maine, and New Hampshire legislatures, along with several public health communities around the U.S., are considering the mid-level dental provider model.

59% of the dentists who responded to this survey believe that there should be fewer alternative providers than there already are.

In this survey, dentists also question whether mid-level oral health providers can sustain the same standard of care as a licensed dentist.

As one California dentist put it, “I went to college and dental school for eight years in order to receive the education necessary to safely perform irreversable procedures upon the human body. It is clear that this level of education cannot be achieved in two or three years. Isn’t it interesting that the proponents of the low-level provider scheme intend that it be used for OTHER people’s healthcare, and not for their own?”

Here’s how the dentists answered the question: “What are your thoughts on alternative dental providers?” —

22% — Good! Alternative providers increase access to dental care.

53% — Bad! I am concerned about the level of care they can provide.

25% — Not sure. I don’t know how the benefits weigh against the risks.

The vast majority of dentists, who think alternative providers are a bad idea are suburban dentists. Rural dentists are most in favor of mid-level providers, while urban dentists are most unsure about this type of dental care.

Here’s what dentists had to say about alternative dental providers —

“They won’t be going to the shortage areas, which is where the need is because there will not be the money they want or need to practice successfully. A better alternative is to pay student loans in exchange for dentists going to the shortage areas. We are just like politicians, people go for the money. Why establish a whole new curriculum and physical schools that will cost a lot more than paying student loans?” (Missouri dentist)

“I don’t see a safety issue. I see a need for a public health system to employ them… otherwise, insurance companies and entrepenurial dentists will employ them and use them to crush our ability to make a living in private practices.” (Illinois dentist)

“I dislike the term ‘alternative dental providers’, it makes it sound like plumbers or shoe repair people could potentially do dentistry.” (Maryland dentist)

“We have no access-to-care problem here, we have a lack-of-patients problem.” (Rhode Island dentist)

“I know dentists are able to see more patients without a decrease in quality. They just need an incentive to reach out to underserved areas.” (Oregon dentist)

“I have had an RDAEF2 for nearly one year now and I think this is a real win-win-win for dentistry, for auxiliaries and for dental patients. My RDAEF2 is caring, competent, talented and all-around wonderful. She has increased my production without increasing my stress level. When I turn a procedure over into her competent hands, I describe her to my patients as being comparable to a nurse practitioner or physician’s assistant but in the dental sphere. Patients have been very accepting of her and I know they are well cared for by her. She has been, for me and in my practice, better than an associate. With associates, I was constantly baby-sitting them to make sure they weren’t missing diagnoses, saying the wrong thing, or treating a situation inadequately or, God forbid, ineptly. With my EF2, I diagnose, numb, prep and turn it over to her with a final check by me. My production has shot up while the standard of care remains the same or better.“ (California dentist)

“This access to care debate is mostly a myth to make the politicians look good!” (South Carolina dentist)

“This is the only way we will be able to meet present and future under-served.” (Connecticut endontist)

“Bad idea. There is a reason why dentists go to dental school in order to be properly trained to provide competent care to patients.” (Alabama dentist)

“In the Indian Health Service clinic dentists anesthetized and prepared teeth, trained assistants filled and adjusted, dentists checked and signed off. It allowed us to see twice as many patients in a day and they did beautiful work. This model could work in public dentistry clinics and increase access at a lower price and risk.” (Texas dentist)

“There’s no real need. If patients and insurance valued dental care with proper payment for services, they could use the existing infrastructure of dental availability.” (Nevada dentist)

What are your thoughts on the idea of mid-level oral heath providers? Do you think that it is a good idea?

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